targets and stops on ER2, YM, NQ

"Somebody enlighten me please, as we all know one should use a 3:1 profit to loss ratio to make it in this busies"

no, we don't.

that is neither sufficient nor necessary for success as a trader.

target/stop ratio is dependant on the trade setup (timeframe, instrument traded, etc.)

having a set # for trading, overall, without taking into account the specifics of the setup you are trading makes no sense whatsoever.
 
a point target is not a bad thing.......trailing stops is the tricky part.......stops initially can be set default usually and not loose.....depends on the system being created to include default stops ....as in, if trade bumps stop it is where i don't want to be in trade.......anyway so lose the same each time, or less....mental stops are for the few........very few.......emini daytrading......if you need over 2 pt stop nq u r trading not on higher level,....10 for ym.....max......es is toast.....
 
There is only one way to determine stops and that is to review the data and test for MFE and MAE (like Mr. Hartle suggests).

The rest is just wannabees bullshitting each other.

Steve
 
The problem with MFE and MAE is they are usually based on dollars or points in a trade. Unfortunately, the markets volatility changes over time so either the stops generated will be too sloppy (as in using data from the late 90's in the ES) or too tight (as in using data from 2004-2005 in the ES). Is there a way to account for the fluctuating volatility levels?
 
Quote from moneymoneymoney:

...Is there a way to account for the fluctuating volatility levels?
More...

Volatility Analysis and some understanding of supply/demand especially when trading a trading instrument like ER2.

Therefore, using fixed stops or fixed targets as if ER2 trades the same every day or every hour is counter-productive.

Heck, a pattern signal that occurs at 10am est is much different in its trade management (should be different) than the exact same pattern signal that occurs at 1230pm est because the causes for the pattern signal are different as revealed by Volatility Analysis.

Simply, using a fixed risk:reward ratio is also saying that ER2 trades the same every trading day or every hour...

This is a false assumption and a major criticism of fixed risk:reward methodology.

Regardless, if someone is trading ER2 profitably via the same fixed risk:reward each trading day...keep doing it and more power to you.

Mark
 
Quote from NihabaAshi:

Volatility Analysis and some understanding of supply/demand especially when trading a trading instrument like ER2.

Therefore, using fixed stops or fixed targets as if ER2 trades the same every day or every hour is counter-productive.

Heck, a pattern signal that occurs at 10am est is much different in its trade management (should be different) than the exact same pattern signal that occurs at 1230pm est because the causes for the pattern signal are different as revealed by Volatility Analysis.

Simply, using a fixed risk:reward ratio is also saying that ER2 trades the same every trading day or every hour...

This is a false assumption and a major criticism of fixed risk:reward methodology.

Regardless, if someone is trading ER2 profitably via the same fixed risk:reward each trading day...keep doing it and more power to you.

Mark
More...

There are certain market dynamics within the ER that I dont see changing for a while. I have been very successful using fixed targets and stops on the er for awhile now. But that confidence also came from spending hours and hours of backtesting my entries and exits over a couple years of data. I know what to expect from my plan and can reassess if my performance is starting to divert from the past. As far as trading the same every hour, you have to filter your plan according to what produces the best odds for you. I know that I never take a trade during lunch or the last 15 minutes of the day because the market typically does not display normal behaviour during those times. I also know which days are going to be trending with a high probability so I know to let my runners go farther on those days. Its the accumulation of edges that turns decent results into extraordinary results.
 
i see many large trades buyin' er2 durin' the last 5min. easy to spot 50-60 lots. every time i saw that size buyin' er went much higher soon afterwards.
 
Quote from NihabaAshi:

Volatility Analysis and some understanding of supply/demand especially when trading a trading instrument like ER2.

Therefore, using fixed stops or fixed targets as if ER2 trades the same every day or every hour is counter-productive.

Heck, a pattern signal that occurs at 10am est is much different in its trade management (should be different) than the exact same pattern signal that occurs at 1230pm est because the causes for the pattern signal are different as revealed by Volatility Analysis.

Simply, using a fixed risk:reward ratio is also saying that ER2 trades the same every trading day or every hour...

This is a false assumption and a major criticism of fixed risk:reward methodology.

Regardless, if someone is trading ER2 profitably via the same fixed risk:reward each trading day...keep doing it and more power to you.

Mark
More...

A couple of more thoughts seem appropriate. Yes, volatility does change. And, that again, points to the value of performing and maintaining using real-time trades MFE and MAE analysis of your setups. Then you will know the market has evolved, and you, one, won’t start blaming yourself for losing trades, and two, you can adjust your strategy. The original MFE and MAE analysis will provide key information, such as don’t take signals during lunchtime in Chicago, as the equity market tends to sit.

I have wrote about some of these topics for Active Trader magazine. They are available at their web site for purchase (I don’t receive a royalty). They have a 74-page collection of 15 of my articles available here: http://www.activetradermag.com/specialcollections.htm.

Click on the link for the collection of articles by me and you will see a detailed listing of the articles including the month and year of publication. If you have the back issues, you can find the articles from this list.

Everything this thread has touched upon is addressed in that group and more. A couple of articles go into detail how to do MFE and MAE analysis. Another one, I look at the range of bars throughout the trading day. I have started a personal blog, www.hartleandflow, and I will be writing about some of these same issues there, as well.
 
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